On May 29, Azerbaijan’s President Ilham Aliyev officially inaugurated the first phase of the long-awaited flagship project Southern Gas Corridor (SGC), through which Caspian natural gas from the Shah-Deniz II field will be transported to Europe. The new project consists of several pipeline networks that pass through Georgia and Turkey (via the Trans-Anatolian Pipeline, TANAP) and further through Greece, Albania and Italy (via the Trans-Adriatic Pipeline, TAP). As Shah Deniz Stage 2 is implemented, gas production will increase from 9 to 25 billion cubic meters (bcm) per year.

On October 30, 2017, Azerbaijan’s President Ilham Aliyev, along with Turkey’s President Recep Tayyip Erdogan, Georgia’s Prime-minister Giorgi Kvirikashvili, Kazakhstan’s Prime Minister Bakytzhan Sagintayev, and Uzbekistan’s Prime Minister Abdulla Aripov attended the opening ceremony of the long-delayed Baku-Tbilisi-Kars (BTK) railway. “The opening of the railway is of historic and strategic significance,” Aliyev said at the ceremony in the Caspian port city of Alat, south of Baku, to mark the departure of the first trains. In fact, the opening of the new railway provides an alternative route to existing rail services carrying goods from Asia to Europe.

On November 15 during the 7th Regional Economic Cooperation Conference on Afghanistan (RECCA-VII) in Ashgabat Turkey, Afghanistan, Turkmenistan, Azerbaijan and Georgia signed an agreement providing for a major international trade and transport corridor stretching from Turkey to Afghanistan via the post-Soviet Central Asian republics, named the “Lapis Lazuli Corridor.” While many practical problems remain, the development and operation of such a railway corridor has enormous implications for the countries along its route, particularly Afghanistan.

On May 23, the defense ministers of Azerbaijan, Georgia and Turkey (AGT) held a trilateral meeting in Batumi, followed in June by the joint trilateral field training Caucasian Eagle 2017 of the three countries’ Special Operations Subdivisions in Georgia’s Vaziani base. The negative impact of terrorism and aggressive separatism on stability and development in the region makes it necessary to pool the capabilities of these countries to confront potential threats directed against their security and sovereignty. The AGT tripartite partnership has proven more successful than other regional integration blocs and initiatives.

The weakening strategic position of Turkey will have a profound impact on the Black Sea-Caspian region and wider Central Asia. An assertive Russia and diminishing U.S. and Western engagement further limits Turkey's ability to play a pro-active role in the region. For regional actors in the South Caucasus, part of the solution should be to create the best possible conditions for transiting Asian cargos via Central Asia, the Caspian Sea, the South Caucasus corridor and the Black Sea to Bulgaria and Romania. This is how countries of the South Caucasus can bring new balancing powers to the region.

Foreign investment in Georgia is strengthening the country’s importance in connecting East Asia with Europe, which has positive implications for the broader region. The rise in FDI in commercial and transportation infrastructure in combination with the signing of international free trade agreements will reduce Georgia’s vulnerability in terms of economic and, ultimately, ‘hard’ security. The growing importance of the South Caucasus as node for EU-China trade will weaken Russia’s incentives to undermine its southern neighbors by military, political, and economic means as it has done in the past. Accordingly, Tbilisi’s ability to conduct an independent foreign policy is set to improve despite the absence of Western security guarantees.

The Trump administration will soon undertake a comprehensive review of Russia-US relations and U.S. policy toward the rest of Eurasia. Although the new team will presumably consider many options, the president-elect’s statements imply that the U.S. will not soon support further NATO expansion or other actions that would strongly antagonize Moscow. Despite this limitation, the U.S. government will continue security ties with U.S. partners in Eurasia, such as Georgia. In practice, there are a number of steps the U.S. and Georgia can undertake to advance their mutual security.

On October 2, China and Georgia signed a preliminary free trade agreement (FTA), scheduled to take effect from the end of 2017, China’s first substantive FTA negotiations in Eurasia. The FTA’s 17 sections include trade goods, services, intellectual property rights and emerging issues like e-commerce, with the two parties agreeing to remove all tariffs for most of the two nations’ commodity trade, as well as pledging to open many service sector markets and improve bilateral trade laws while identifying key areas for enhancing cooperation.

Few people think about trends in the Caucasus with reference to or in the context of Russia’s Syrian intervention. But Moscow does not make this mistake. From the beginning, Moscow has highlighted its access to the Caucasus through overflight rights and deployment of its forces in regard to Syria, e.g. sending Kalibr cruise missiles from ships stationed in the Caspian Sea to bomb Syria. Therefore we should emulate Russia’s example and seriously assess military trends in the Caucasus in that Syrian context.

The Iran-Armenia-Georgia gas talks have recently gained momentum. Iranian and Georgian companies have signed gas purchase contracts, to supply natural gas to Georgia through Armenia. While the perspective of enhanced Iran-Armenia-Georgia gas cooperation is limited from political and technical viewpoints, Armenia is actively seeking to carve out a new role for itself in order to mitigate the repercussions of its long-running isolation in the region. Yet the dominant role of Russia’s Gazprom in Armenia’s energy sector, as well as the lack of technical opportunities, pose significant obstacles to the delivery of large amounts of Iranian gas to Georgia through Armenia.